Collective Redundancies – Notice of Dismissal

Employers are under a statutory duty to consult with the appropriate employee representatives concerning proposed redundancies if the intention is to dismiss at least 20 employees at one establishment within a 90 day period. If there is a recognised trade union, the consultation must be with trade union representatives. Consultation must be fair and in good time and, in any event, where between 20 and 99 employees are being dismissed it must begin at least 30 days before the first dismissal takes effect. If 100 or more redundancies are proposed at one establishment within a 90 day period, consultation must begin at least 90 days before the first dismissal takes effect. Failure to consult as required can lead to an Employment Tribunal requiring the employer to make protective awards to the dismissed employees.

In the UK, the position has been that a dismissal by reason of redundancy occurs at the point when the employee ceases to work for the employer. Provided consultation is meaningful, notice of termination of employment could be given during the consultation period. However, a recent ruling by the European Court of Justice (when asked to clarify the EC Collective Redundancies Directive in Junk v Wolfgang Kühnel) rejected this interpretation of the law. The Court ruled that the event which constitutes redundancy is the declaration by the employer of the intention to terminate the contract of employment. It viewed the actual cessation of the employment relationship as merely an effect of the earlier decision.

As a result of the ECJ’s ruling, consultation of the required duration must take place before any employees are given redundancy notices. The Court was of the view that consultation could not be meaningful, with a view to reaching an agreement, if the decision to dismiss employees had already been taken, effectively compromising the consultation process.

The effect of this decision is that an employer proposing to make redundant 20 or more employees from one establishment must involve them in the decision at an earlier stage in order to complete the 30 or 90 days consultation required before giving any of them notice. This is likely to delay proceedings and add to the cost of the redundancy process.

Carrying out a redundancy programme always requires care. This decision means that employers will need to start the consultation period earlier and take care to ensure that the consultation is meaningful. We can help ensure this difficult process is carried out without the risk of unanticipated financial consequences.